Yes, Real Estate prices are currently artificially depressed. It does not make sense to sell Real Estate now unless you are forced to sell.
Also, Appraisals are artificially low right now. Even the banks that own Real Estate recognize this. Many of the banks are selling their foreclosed properties, that if the property does not appraise, the buyer is to make up the difference in cash.
Currently I am seeing many buyers with all cash or down payments in the range of 40 to 50% or more. These sales at higher prices, above appraised value, will be the new comps and prices will rise.
The market that we see today is very similar to the market that we saw in 1986 and 1987 when the economy was rebounding. We had several years of pent up demand, and interest rates were coming down for the 20% rates that we had in the early 1980s.
The all cash buyers, and the buyers with large down payments picked up the bargain priced properties and bid the prices up. When the appraisals caught up with the market the prices took off in 1988 and 1989.
Now is the time to buy Real Estate not sell it. People who have homes to sell today are waiting for the inevitable price rise before they put their homes on the market.
The current rebounding economy and the pent up demand from the last few years will force up Real Estate prices in the next few years.
Charles Butterfield MBA
Real Estate Broker/REALTOR
Cell Phone: (408)509-6218
Email Address: email@example.com
2. Realtors cannot make a buyer write a check.
3. The low comps and prices affect Realtors' personal real estate values just as they affect the general market.
4. The wild pitch, low-ball offer mind set is wide spread among buyers.
5. Talk to the buyers out there who want a super bargain from private sellers about the affect their actions have on the price of homes. Buyers want a bargain and they do not want to over pay.
As for the low inventory we have in many communities today, this could be a result of many factors. One of the factors is that sellers are waiting for the market value of their home to increase before selling. While this is a good strategy if the seller is moving to an area with high inventory and lower prices, this does not work as well for those who are staying local and want to "move up". As the value of their home goes up, so do all the others. However, some sellers may need to wait because they do not have the equity in their home to coverr their mortgage value and do not qualify for a short sale or want to do this.
Other factors leading to lower inventory is that fewer people "need" to move right now. Companies are likely not paying to transfer employees as often as in prior years, and people are not as likely to change jobs as frequently because they want to build up a little seniority...and hopefully, job security or improved benefits.
These are just some examples of why our inventory is low. This discussion can go on for a long time, and is discussed by economists all the time.
And believe me, I wish I could sell homes for a higher value...but usually the market determines the fair market value of homes.
Alain Pinel Realtors - Pleasanton
Intero Real Estate
DRE # 01125380 since 1991
The market value of anything is what the buyer is willing to pay. Often the cash buyer will pay a higher price for a home than the appraised value. These buyers are commonly very smart investors who understand market trends and how it affects value. A buyer who is using a traditional mortgage process does not have the same flexibility when an appraisal comes in 5% below the true market value.
This current value trend is in an upward trajectory...however a low one. With so few sales and inventory It may take as long as 18 months for today's trend indicators to be broadly recognized in sales data that appraisers use to place a current value on a home. It will improve, be assured.
We are fully aware that the closed sales are the new comps. People have not been able to sell for years and now because the inventory is so low the demand is high. Low inventory and High Demand affects the value. The closed sales we will see in the next couple of months will be higher than they have been in the last year or two. Just not as high because the appraisers still have to support the value.
The number of short sales and Bank owned properties have affected the values and for the equity sellers this has not been good news. So the equity sellers have held off on selling because they need more money or least they end up being short as well. That is the reason inventory is low. You will still have people who need to sell due to relocation, move up, move down, estate sales, etc.
Price is also affected by the availability of funds which too is affected by supply and demand. So we are seeing low interest rates which open up the opportunity for more buyers, without that our real estate market would probably be more stagnate than it was.
So if you don't need to sell and can wait if out, then that may be an option for you. Right now, we are seeing multiple offers, as-is, and quick closings on several homes. This is a benefit to a lot of sellers.
Your hunch that people are not selling because comps are low is a fact. The goal is "buy low, sell high" or at least at the Breakeven Point. But that's just a part of the reason why inventory is low.
There will be more inventory coming out (already due) from the "robo-signing" settlement.
How much? That is even harder to say now that banks like B of A are trying to become landlords.
Even worse is the government is creating demand for properties by keeping rates low. If there is inventory, it goes fast. Especially in Oakland, San Jose, and San Francisco.
The first time home buyers are at a disadvantage in the current market. The competition from cash buyers, investors, everyone else, and flipped homes have inflated the home prices. This creates that out of pocket contribution the banks are requiring buyers agree to by waiving the appraisal contingency. Something that they just can't come up with in addition to the deposit.